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MGT Capital Investments Inc. (OTCMKTS:MGTI) Is Launching Sentinel

MGT Capital Investments Inc. (OTCMKTS:MGTI) Is Launching Sentinel
Written by
Chris Sandburg
Published on
November 2, 2017
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When we last looked at MGT Capital Investments Inc. (OTCMKTS:MGTI), we discussed the company's then-recent update as to the progress and development of its bitcoin and other cryptocurrency mining operations.As per the update, MGT had upped its planned total deployment to approximately 4,700 Bitmain Technologies S9 Antimer rigs, which, when at full power, will be generating hash power in excess of 60 Ph/s.We also learned that mining operations at this power are expected to generate over $2.0 million in monthly revenue, assuming recent pricing and difficulty rates, which will factor down to around $1.1 million in EBITDA.That's pretty substantial, but it's not the reason we're taking a look at the company today.Instead, we're shifting focus to another side of MGT's operations – it's cybersecurity arm.This side of the company is more in line with something we might expect to see from a McAfee-led entity and it's one that, over the past twelve months, has injected a degree of uncertainty into MGT's ability to execute on its operational strategy. MGTI Daily ChartSpecifically, we're talking about a product called Sentinel, which is a network security device that's designed to be retrofitted to a network and, on activation, designed to monitor traffic that enters and exits the network for security concerns.The device was initially designed for launch earlier this year but ran into some initial problems when testing revealed security flaws in its software. If you are selling a product that’s supposed to secure a network, you don't want it having security issues of its own.So, McAfee got to work fixing the issues and, in September, announced that the product was finally ready for launch and available to preorder.So what's happened recently that affects this side of the company's operations?Well, we just learned that MGT has executed on a distribution agreement with an entity called Interwork Technologies for the marketing and sale of the Sentinel system. It's a nonexclusive agreement and it covers North America.Interwork will bring to the table its 2,500 reseller channel partners which it bills as having the technology expertise and support required to effectively bring products to market.What this will mean for sales is unclear right now, given that we haven’t got any idea of the scale of the initial demand for this product. We alluded to a potential catalyst being an indication as to preorder volume but now we are going to shift focus to this distribution agreement (and potentially others of its type in North America and internationally) as being the real value catalyst for MGT – at least as far as its cybersecurity operations are concerned – near term. We will still look out for scale updates of course, but it looks as though the company has decided that a distribution network approach is the way to go and – for us – this seems to make sense.Outside of Sentinel, any growth in the bitcoin space is really going to drive value for MGT near term. The price of bitcoin just breached the $7,000 mark – a major resistance level – and this is bringing with it a large amount of speculative interest. Not only is MGT a publicly traded exposure option for market participants who want exposure to bitcoin but don’t want to buy the asset outright, it also owns a large number of its own bitcoins that it has generated on the back of its mining activities. This means that every time bitcoin rises in price, so does the asset side of the company's balance sheet.Keep in mind that we're probably going to see some dilution near term as the company issues to fund Sentinel's commercialization.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on MGTI, sign up below!Image courtesy of Steve Garfield via FlickrDisclosure: We have no position in MGTI and have not been compensated for this article.

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